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What will be the effect on firm profits

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Question - The following income statement is for X Company's two products, A and B:

 

Product A

Product B

Revenue

$93,000

$86,000

Total variable costs

51,150

49,020

Total contribution margin

$41,850

$36,980

Total fixed costs

 

 

Avoidable

30,607

13,902

Unavoidable

22,163

12,328

Profit

-10,920

10,750

If X Company drops Product A because it shows a loss and is able to use the vacant space to increase sales of Product B by $35,700, with $3,800 of additional fixed costs, what will be the effect on firm profits?

Reference no: EM132508905

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